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Do we really need Ethics in our business?

Can you remain eth­i­cal when a devi­ous rival is pro­moted ahead of you? Can you stay civil when a curs­ing dri­ver cuts you off the road?

By Fareeha Qay­oom

M

odern life means con­stant com­pe­ti­tion. We strug­gle at school for grades and admis­sions, bat­tle at work for mar­kets and money, and every­where strive for sta­tus and recog­ni­tion. In this pressure-cooker envi­ron­ment, obsessed by out-of-reach goals and hemmed in by poten­tial adver­saries, how can we expect high moral val­ues, let alone cour­te­ous behav­ior, to sur­vive? Is it even real­is­tic to expect ethics to play a key role in every­thing we do? The dete­ri­o­ra­tion of morals and the ero­sion of respect in the con­tem­po­rary urban world impov­er­ish us all. But can we fairly place the blame only on the fran­tic pace and feroc­ity of our day-to-day exis­tence?

Tkfr assem­bled a few experts from our indus­try to talk about ethics. We asked them a fairly sim­ple ques­tion – Do we really need ethics in our busi­ness? Is the issue even real? Espe­cially when the spot­light is on us to behave eth­i­cally col­lec­tively as an indus­try? We are all famil­iar with the work National Labor Com­mit­tee (NLC) con­tin­ues to do by high­light­ing sweat­shop con­di­tions in Asia and South Amer­ica by keep­ing up the pres­sure and tak­ing on large cor­po­rate Giants of our indus­try like Kohl’s more recently to Wal-Mart, Nike and Gap in the past by stag­ing more store protests and by leas­ing bill­boards to illus­trate the eco­nomic dis­par­ity between their exec­u­tives and their vendor’s work­ers. They are best known for their cam­paign against U.S. enter­tainer Kathie Lee Gif­ford and Wal-Mart four years ago, NLC has also taken on casual apparel retailer Gap Inc., and ath­letic shoe­maker Nike Inc. Kohl’s cor­po­ra­tion is their most recent tar­get. Ven­dors are feel­ing the heat too, espe­cially since the pres­sure is on them to com­ply eth­i­cally with the inter­na­tional stan­dard terms of engage­ment (TOE) if they want to con­tinue work­ing with their long time cus­tomers like Nike, Gap, Levi’s…

Omar Dar (Klass Tex­tiles) feels “it’s a good thing if it’s imple­mented in the true spirit. A lot of progress has been made already – things were never bad to begin with but it wasn’t a pri­or­ity in the past. I think it started back in 1993. Levi’s was the first cus­tomer who started pay­ing atten­tion to the TOE issues. I guess because the spot­light was on them to behave more eth­i­cally by the US media. Things have improved con­sid­er­ably since more atten­tion is now being paid to the worker issues. The TOE move­ment should have started from inside, not through exter­nal pres­sure. How­ever, the fact is, ulti­mately the work­ers are ben­e­fit­ing no mat­ter where the pres­sure is com­ing from. They are get­ting cold water to drink in the sum­mer heat, they have bet­ter work­ing con­di­tions and pay ben­e­fits, they are get­ting med­ical atten­tion on the spot and safer work­ing envi­ron­ment to work in. On ground these things have improved. There is a need to bring it to a min­i­mally accept­able level by the whole indus­try.”

“I know in a per­fect world, every­one would behave eth­i­cally, how­ever, in the real world if it’s a clash between ethics and the bot­tom line, most peo­ple would choose the bot­tom line – money,” asserts Omar. “It would not even be a sec­ond pri­or­ity. It usu­ally comes last in most people’s list of pri­or­i­ties. I am not say­ing money is the most impor­tant issue. Ethics do play a role too and given a chance most peo­ple would like to behave eth­i­cally. How­ever, on a scale, I would give ethics thirty per­cent — money would win each time if it ever comes to a choice between the two. After all, we are run­ning a busi­ness, not a char­ity and earn­ing profit is the name of the game. It’s a judg­ment call. Every sit­u­a­tion is unique and brings it’s own sets of solu­tions. Some­times it’s a ques­tion of ethics and some­times, it’s a ques­tion of money. Per­son­ally I go for the min­i­mum cost fac­tor.”

Moiz Farooq (Ammar Tex­tiles) does not agree with this view. “Ethics is nec­es­sary. It’s a way of life. It’s not a com­mod­ity. Either you are eth­i­cal or you are not. Lapses do occur. How­ever, as long as you achieve an accept­able level of pro­fes­sional, legal and eth­i­cal behav­ior in daily oper­a­tions con­sis­tently, you are eth­i­cal. For exam­ple, I think Levi’s is an eth­i­cal com­pany. It’s not mere lip ser­vice. They mean it and it shows. They do not work in Mid­dle East due to TOE issues.”

“If you want to earn money, tak­ing the eth­i­cal way is more prof­itable in the long run,” com­ments Moiz. “We sin­cerely believe that at Ammar. Our mis­sion state­ment is all about ethics – integrity, con­tin­u­ous learn­ing, lead­er­ship, team­work and social respon­si­bil­ity. I per­son­ally and pro­fes­sion­ally believe in behav­ing eth­i­cally.

I don’t need to con­vince or jus­tify this attitude…it’s our cor­po­rate direc­tion and it’s crys­tal clear. It’s also our short term and long-term strat­egy in cri­sis man­age­ment. It pays to be eth­i­cal. Nobody is per­fect. But as a pol­icy, ethics play a key role in our sys­tems and labor man­age­ment poli­cies. Inten­sive edu­ca­tion at all lev­els gives us strength to imple­ment our mis­sion state­ment in rou­tine mat­ters and daily oper­a­tions. I can’t stress enough ethics starts from the top.”

Tkfrwas also curi­ous to know if ethics play any role in cri­sis man­age­ment and in com­mu­ni­cat­ing bad news to the cus­tomers? The responses we got were quite mixed. Camille Pearson-Walz(Room and Board) is not a stranger to Pak­istan. Through­out her diverse career, (she used to be a prod­uct man­ager for Munsingwear’s Golf lines — Grand Slam® and Mun­sing­wear®, before the brands were acquired by Supreme Inter­na­tional — she has been a leather acces­sory buyer and man­u­fac­tur­ing spe­cial­ist for men’s and women’s leather out­er­wear, and before that she used to buy leather apparel, now she buys fur­ni­ture), one thing has remained con­stant, the rules of buy­ing have not changed. “In the busi­ness that I am in now (furniture) — HONESTY – INTEGRITY – TRUST are key to a solid part­ner­ship,” says Camille. “I work for a unique com­pany that truly val­ues the ven­dor. I work with my ven­dors’ daily and in part­ner­ship along side with our mer­chan­dis­ing team to make sure we are com­mu­ni­cat­ing and under­stand­ing clearly what the bot­tom line is. I rarely need to ask for a dis­count. I have never asked for freight to be pre­paid due to a delay…charge backs are rare and because of this we are not cheated or over­charged on the real cost for devel­op­ing and pro­duc­ing new lines.”

“Some­times, it’s dif­fi­cult to be hon­est with the cus­tomer and their local agents,” says Omar. “Nobody wants to hear bad news, espe­cially the buyer’s agents. They are not very recep­tive — the nor­mal reac­tion is to shoot the mes­sen­ger. The customer’s peo­ple are not very tech­ni­cally sound and do not under­stand the man­u­fac­tur­ing issues. It makes it tough to com­mu­ni­cate bad news and stay hon­est. Some­times, the agents do not pro­vide vital pieces of infor­ma­tion received from the cus­tomer that could help improve the sit­u­a­tion. Com­mu­ni­ca­tion plays a very impor­tant role in devel­op­ing customer/vendor rela­tion­ship. Tim­ing is also an issue. It’s not only ‘how’ you com­mu­ni­cate the bad news, ‘when’ is also impor­tant. It also depends on the work­ing rela­tion­ship with that cus­tomer. It’ more of a judg­ment call — there is a cer­tain degree of manip­u­la­tion involved since customer’s agents need to be han­dled with care and tact when com­mu­ni­cat­ing bad news. It’s never cer­tain if they ever tell the cus­tomer the com­plete story or the truth gets bent out of shape in the telling by the agent so it’s a very sen­si­tive issue and needs to be han­dled with extreme care.”

Camille, on the other hand, is not unsym­pa­thetic to the manufacturer’s issues, how­ever, she feels the bot­tom line is achiev­ing effec­tive results and it can only be achieved if com­mu­ni­ca­tions between cus­tomer and ven­dor are han­dled more hon­estly — she com­ments,” Buyer’s (if their com­pany will allow the time and money) need more edu­ca­tion as to what goes into man­u­fac­tur­ing: find­ing work­ers, com­pe­ti­tion, engi­neer­ing, sup­ply prob­lems from fab­ric and print sources. This needs to be done up front so a buyer under­stands the expec­ta­tions of each resource. Buy­ers usu­ally don’t want to hear excuses. They want what the ven­dor ‘promised’ up front. Buy­ers need ven­dors to pro­vide real­is­tic cost­ing and deliv­ery date infor­ma­tion up front and then be as proac­tive as pos­si­ble to advise delays so they can realign promotions/advertising. The buyer pays their agents to take care of the prob­lems and to smooth out the trou­ble spots so that they can spend more time on the ‘big pic­ture’ with more cus­tomer focus and devel­op­ment on the future. When a ven­dor or buyer is not being real­is­tic and up front then there is sure to be dis­ap­point­ment at the end. That is where the agents come in.”

Moiz also con­curs with Camille. He insists hon­esty in com­mu­ni­ca­tion is very impor­tant, espe­cially if it’s bad news. “Lying does not work long term. The cus­tomer will find out tomor­row if you lie to him today. Cred­itabil­ity is very impor­tant in com­mu­ni­ca­tion. Besides, just think about it for a minute – if there are ten processes in pro­duc­ing a cer­tain prod­uct for exam­ple, and you mess up at stage one, if you keep lying to cover up the mess; the cus­tomer will still find out at stage nine or ten. What will you do? Will you add on more lies? Things have a way of snow­balling out of con­trol in such a sit­u­a­tion. Lying means end­ing up with the poten­tial egg on your face; it’s risky. It could go either way. You could end up a hero but chances of falling are greater when you are out on a limb. It’s bet­ter to tell the cus­tomer the truth upfront. In fact, I am quot­ing from a recent exam­ple. We messed up in our plan­ning sched­ules big time. We went to the cus­tomer and told him up front. The cus­tomer was empa­thetic and helped us by being patient while we worked through the plan­ning cri­sis and pro­duc­tion. We had to pay the price for mess­ing up by air­ing the goods but we kept the cus­tomer. We went back and redid the plan­ning for next six months. The end result, we did such a good job, we exe­cuted the next quarter’s orders by deliv­er­ing before our dead­lines and exceeded the customer’s expec­ta­tions. We man­aged the cri­sis hon­estly and it worked. It pays to be hon­est in long run.”

Camille, how­ever, agrees with Omar to a cer­tain extent by allow­ing in a lit­tle cre­ative man­age­ment in com­mu­ni­ca­tions, she adds in an advice to agents… “When you are man­ag­ing many resources, maybe you should ‘pad’ (a week or two) the dates for ship­ping so that the buyer / cus­tomer isn’t dis­ap­pointed with com­mon delays — work­ers didn’t show up – fab­ric did not meet expec­ta­tions — equip­ment break­down – weather prob­lems, ship couldn’t fit con­tainer. Edu­cate as much as pos­si­ble. This way a buyer might have a clearer under­stand­ing that there are real and ded­i­cated peo­ple, mak­ing the prod­uct and they get sick and have prob­lems just like we do and bad things hap­pens.… so pre­pare for it. It would be nice if the apparel indus­try would be dif­fer­ent but it has been the way it’s been for decades. Buy­ers, not unlike me, have selec­tive hear­ing,” she says. “Apparel is such a fast paced busi­ness and so com­pet­i­tive they are judged more crit­i­cally on did the prod­uct deliver on time? Was it what we ordered? And did it sell? They aren’t judged on how well they work with a resource or how well they under­stand man­u­fac­tur­ing. Bot­tom line is did they con­tribute to the bot­tom line in a favor­able man­ner? And not nec­es­sar­ily what com­pro­mises can be taken to insure longer-term suc­cess.”

Cindy Boed­deker (Pre­mium wear Inc.) puts things in per­spec­tive. “In my opin­ion, a buyer needs to be made aware of the issues; as chances are they will impact the deliv­ery of the prod­uct. I believe the agent can man­age the minor issues that will not impact the deliv­ery. I think how­ever, the buyer should be made aware even if it does not impact the deliv­ery– it should give the buyer con­fi­dence that you are man­ag­ing the pro­duc­tion details of their orders. I am sure not all buy­ers think alike, some buy­ers may think that, its your job to trou­ble shoot and man­age the pro­duc­tion details and bot­tom line hit the deliv­ery date…As Pre­mium Wear is a man­u­fac­turer as well as a sourcer – we believe a true part­ner­ship includes know­ing the nec­es­sary details — so we can work together to resolve issues, or be made aware of issues early on, so we can inform our cus­tomers.”

Camille adds a last word on cor­po­rate ethics by com­ment­ing, “All par­ties are in busi­ness to pro­vide a service/ ful­fill a want or need for the end user. If each party has respect for one another, con­duct­ing busi­ness would be more ful­fill­ing. If you aren’t enjoy­ing what you are doing, then maybe you should look to do some­thing else…this isn’t brain surgery.” ¨

Klass Tex­tiles and Ammar Tex­tiles closed down a good few years ago. Moiz Farooq and Omer Dar opened up their own busi­nesses. Lahore Knitwear indus­try has shrunk down to a few giant play­ers like Com­fort Knitwear, Com­bined Fab­rics and Leisure Tex­tiles. The days of big cor­po­rate ver­ti­cal giants is no more. Edi­tor

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Do we really need Ethics in our busi­ness?, 9.0 out of 10 based on 2 rat­ings

2 Comments

Bal­ance the ethics for­mula: a tool for guid­ing our choices
ABDULLAH TELMESANI
ARTICLE (August 21 2010): Achiev­ing higher lev­els of eth­i­cal con­duct, as is the case of achiev­ing all opti­mal posi­tions, is a bal­anc­ing act. For cor­po­ra­tions, eth­i­cal atti­tude and sus­tain­able suc­cess are achieved by strik­ing a bal­ance between the bottom-line on one side, and the inter­est of the employ­ees and the com­mu­nity at large on the other.

Employ­ees’ eth­i­cal behav­iour and suc­cess, on the other hand, are achieved by bal­anc­ing their per­sonal inter­est with their com­pa­nies’ inter­est. The for­mula above seems, accord­ing to Deloitte 2010 Ethics & Work­place sur­vey, to be par­tially com­pro­mised. In their strug­gle to sur­vive the reces­sion, some com­pa­nies seem to have had to take dras­tic deci­sions that are not typ­i­cal to their cor­po­rate cul­tural norms. These cor­po­rate actions and deci­sions nat­u­rally lead to employ­ees’ uncer­tainty about cor­po­rate deci­sions and inten­tions.